Financial planning for small businesses may seem like a luxury—something only “the big guys” do. Or, in the intense mix of starting and operating a small business, it may feel like it can be pushed off until later. But no, it can’t wait. No matter how great the vision or how inspiring the energy of the business leaders, the business can’t succeed if the business path is not well-marked and if the money isn’t there. As John L. Beckley, former Librarian of Congress said, “Most people don’t plan to fail, they fail to plan.”
Why Small Businesses Need Financial Planning
Planning is an essential activity for every business. For small businesses that have smaller budgets, there is less room for error, so financial planning is even more critical. Without financial planning, a small business is more likely to fail. Financial planning is necessary because it helps:
- Focus on essentials and on the future of the business.
- Guide everyday expenses and prioritize spending decisions.
- Identify and respond to financial downturns as well as seasonal fluctuations.
- Measure progress.
- Make marketing and sales decisions.
- Understand sales trends and enable owners to capitalize on them.
- Understand and manage the bottom line.
How Small Businesses Can Use Financial Planning
First, it is important for small businesses to separate personal and business goals. (And separate all financial aspects as well.) Next, use the financial plan to:
- Secure funding that will allow your business to grow and thrive. Develop projections and provide financial statements that will wow potential lenders and investors.
- Establish key targets, short and long-term.
- Drive revenues.
- Control operating expenses.
- Manage cash flow and assure liquidity.
- Manage tax consequences, liabilities, and payments.
- Manage assets.
- Guide all investment decisions.
Seek Expert Financial Assistance
Small businesses succeed with expert financial assistance. Contact Alternative Capital Source, with offices in Fort Worth and Irving, TX. We offer a wide array of excellent business loans and financing options to fit your unique needs.